By Tim Hepher
PARIS (Reuters) -French aero engine maker Safran unveiled stronger than expected quarterly revenues on Wednesday, buoyed by a swift recovery in air travel, but predicted problems with aviation’s supply chain could drag into next year.
“The (pandemic) demand crisis is well and truly behind us,” Chief Executive Olivier Andries said after reporting a 25%underlying rise in first-quarter revenues to 5.266 billion euros ($5.78 billion.
Safran provides engines for medium-haul jets through its CFM International joint venture with General Electric.
Safran’s core propulsion revenues rose 34.9% like for like.
The company reaffirmed full-year forecasts including revenues of at least 23 billion euros but said the main risk remained supply chains, led by materials and labour shortages.
“Guidance is unchanged but the statement makes it clear that risk is on supply side,” Agency Partners analyst Nick Cunningham wrote.
Shares in the world’s third-largest aerospace contractor fell 2.1%.
Andries said all metals were on the watch list for possible disruption, notably steel.
“Steel is a source of tension,” he told reporters.
In January, Reuters reported that steel capacity had emerged as a growing source of concern inside planemaker Airbus, partly following debt restructuring at Liberty Steel.
Titanium, aluminium, nickel and some rare metals also remain under observation, Andries said.
Planemakers have slowed production plans in recent months, easing a tug of war between new jet factories and the repair shops for existing fleets where spare engines are also urgently needed to help airlines meet a snapback in air travel.
In the first quarter, CFM was able to allocate a greater percentage of engines to the civil aftermarket, where its revenues grew 38.1% in dollar terms.
Air traffic is rebounding strongly following the pandemic, with key medium-haul markets already exceeding pre-COVID levels and long-haul traffic making up lost ground.
Andries meanwhile told reporters he still expected the first “qualification flight” of Europe’s delayed Ariane 6 rocket before end-year, with the first commercial flight in 2024.
($1 = 0.9112 euros)
(Reporting by Tim Hepher Editing by Sudip Kar-Gupta and Mark Potter)
